Bitcoin and Gold Tumble, Fed Policy Under Fire, AI Security Risks Surface

Key Takeaways

1. Charlie Bilello calls the Fed's QE policy a mistake as inflation persists; Korea hikes rates. — via 1 2
2. Bitcoin (-27%) and gold (-7%) post worst returns since 2026; Apple P/S at all-time high. — via 1 2
3. Russell 2000 profitability divergence widens; U.S. LEI falls. — via 1 2
4. AI security enters new phase: Kimi K3 fixes bugs, HuggingFace attacked; Jacobian conjecture disproved. — via 1 2 3 4
5. U.S. oil inventories at 45-year low; Middle East conflict pushes crude to $88. — via 1 2
6. Raoul Pal argues AI is a great long-term revolution; short-term volatility irrelevant. — via 1

1. Monetary Policy and Central Banks

1. Charlie Bilello argues that the Fed's decision to resume QE is a mistake, given inflation has stayed above target for 64 consecutive months with a 4% annual average. He advocates for rate hikes and balance sheet reduction. — via 1
2. The Bank of Korea raised its benchmark rate by 25 bps to 2.75%, the first increase since 2023, and signaled further tightening. — via 1
3. Liz Ann Sonders shares a view from former New York Fed President Bill Dudley that the Fed faces tightening pressure due to high inflation. — via 1

2. Market Performance and Valuation

1. Bitcoin is down 27% and gold down 7% year-to-date, making them the worst-performing major assets since 2026. This combination has never occurred historically. — via 1
2. Apple's price-to-sales ratio reached 11x, an all-time high, while the S&P 500 returned 320% over the past 11 years; Disney has fallen 11%. — via 1 2
3. The Russell 2000 shows a growing divergence: profitable companies are outperforming unprofitable ones year-to-date, reversing last year's trend. — via 1
4. The U.S. Conference Board Leading Economic Index (LEI) declined 0.2% month-over-month in June, missing expectations. — via 1

3. AI and Technology: Security, Adoption, and Breakthroughs

1. Raoul Pal dismisses calls for a top in AI, calling it the greatest technological discovery; he notes that institutions are slowly integrating AI into decision-making, and those that don't will fall behind. — via 1 2
2. Kerrisdale Capital is long $RRX (Regal Rexnord), betting on the "physical AI" trend including industrial automation and humanoid robots, as well as data center power needs. — via 1
3. Lyn Alden reports that Kimi K3 fixed all security issues, while Codex and Fable refused due to guardrails, potentially harming OpenAI/Anthropic. She also highlights HuggingFace's AI-on-AI attack and defense as marking the start of the AI security era. — via 1 2
4. The 87-year-old Jacobian conjecture has been disproved: Lyn Alden claims Fable (Anthropic) falsified it, while Elad Gil independently provides a counterexample with Jacobian determinant -2. This could have security implications if similar problems are solved. — via 1 2

4. Energy and Geopolitics

1. U.S. strategic petroleum reserves fell to their lowest since April 1983, decreasing by 305 million barrels (49%) over 5 years. — via 1
2. U.S. crude oil inventories hit a 45-year low, with only 43 days of supply remaining. — via 1
3. Middle East conflict escalates: the U.S. has bombed Iran for nine consecutive nights, 17 U.S. soldiers have been killed since February, and oil prices have climbed to $88/barrel. — via 1
4. Brent crude has risen nearly 15% since the ceasefire announcement earlier this month. — via 1